Unassociated Document


    
       EXHIBIT
10.7

    

    AMENDED
AND RESTATED SUNPOWER CORPORATION

     ANNUAL KEY EMPLOYEE
BONUS PLAN

    (Amended
Effective January 31, 2008)

     

     SECTION
1:  BACKGROUND, PURPOSE AND DURATION

     

    1.1 Effective
Date The amendment and restatement of this Plan is effective as of
January 31, 2008, subject to ratification by an affirmative vote of the holders
of a majority of the Shares that are present in person or by proxy and entitled
to vote at the 2008 Annual Meeting of Stockholders of the Company.

     

    1.2 Purpose of
the Plan The Plan is intended to increase stockholder value and the
success of the Company by motivating Participants (1) to perform to the
best of their abilities, and (2) to achieve the Company’s objectives. The
Plan’s goals are to be achieved by providing Participants with the opportunity
to earn incentive awards for the achievement of goals relating to the
performance of the Company. The Plan is intended to permit the payment of
bonuses that qualify as performance-based compensation under Section 162(m)
of the Code.

     

    SECTION
2: DEFINITIONS

     

    The
following words and phrases shall have the following meanings unless a different
meaning is plainly required by the context:

     

    2.1 “Actual
Award” means as to any Performance Period, the actual award (if any)
payable to a Participant for the Performance Period. Each Actual Award is
determined by the Payout Formula for the Performance Period, subject to the
Committee’s authority under Section 3.6 to eliminate or reduce the award
otherwise determined by the Payout Formula.

     

    2.2 “Affiliate”
means any corporation or other entity (including, but not limited to,
partnerships and joint ventures) controlled by the Company.

     

    2.3 “Base
Salary” means as to any Performance Period, the Participant’s earned
salary during the Performance Period. Such Base Salary shall be before both
(a) deductions for taxes or benefits, and (b) deferrals of
compensation pursuant to Company-sponsored plans and Affiliate-sponsored
plans.

     

    2.4 “Board”
means the Board of Directors of the Company.

     

    2.5 “Code”
means the Internal Revenue Code of 1986, as amended. Reference to a specific
section of the Code or regulation thereunder shall include such section or
regulation, any valid regulation promulgated thereunder, and any comparable
provision of any future legislation or regulation amending, supplementing or
superseding such section or regulation.

     

    2.6 “Committee”
means the committee appointed by the Board (pursuant to Section 5.1) to
administer the Plan.

     

    2.7 “Company”
means SunPower Corporation, a Delaware corporation, or any successor
thereto.

     

    2.8 “Determination
Date” means the latest possible date that will not jeopardize a Target
Award or Actual Award’s qualification as performance-based compensation under
Section 162(m) of the Code.

     

    2.9 “Disability”
means a permanent disability in accordance with a policy or policies established
by the Committee (in its discretion) from time to time.

     

    2.10
“Employee”
means any employee of the Company or of an Affiliate, whether such employee is
so employed at the time the Plan is adopted or becomes so employed subsequent to
the adoption of the Plan.

     

    2.11
“Fiscal
Quarter” means a fiscal quarter within a Fiscal Year of the
Company.

     

    2.12
“Fiscal
Year” means the fiscal year of the Company.

     

    2.13
“Maximum
Award” means as to any Participant during any period of three
(3) consecutive Fiscal Years, $9 million.

     

    2.14
“Participant”
means as to any Performance Period, an Employee who has been selected by the
Committee for participation in the Plan for that Performance
Period.

     

    2.15
“Payout
Formula” means as to any Performance Period, the formula or payout matrix
established by the Committee pursuant to Section 3.4 in order to determine
the Actual Awards (if any) to be paid to Participants. The formula or matrix may
differ from Participant to Participant.

     

    2.16
“Performance
Period” means any Fiscal Year or such other period longer or shorter than
a Fiscal Year but not shorter than a Fiscal Quarter or longer than three Fiscal
Years, as determined by the Committee in its sole discretion.

    
      
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    2.17
“Performance
Goals” means the goal(s) (or combined goal(s)) determined by the
Committee (in its discretion) to be applicable to a Participant for a Target
Award for a Performance Period. As determined by the Committee, the Performance
Goals for any Target Award applicable to a Participant may be made subject to
the attainment of performance goals for a specified period of time relating to
one or more of the following performance criteria, either individually,
alternatively or in any combination, applied to either the Company as a whole or
to a business unit or Subsidiary, either individually, alternatively or in any
combination, and measured either annually or cumulatively over a period of
years, on an absolute basis or relative to a pre-established target, to previous
years’ results or to a designated comparison group or index, in each case as
specified by the Committee: (a) cash flow, (b) earnings per share, (c) earnings
before interest, taxes and amortization, (d) return on equity, (e) total
stockholder return, (f) share price performance, (g) return on capital, (h)
return on assets or net assets, (i) revenue, (j) income or net income, (k)
operating income or net operating income, (l) operating profit or net operating
profit, (m) operating margin or profit margin, (n) return on operating revenue,
(o) return on invested capital, or (p) market segment shares. The Committee may
provide for the adjustment of  any evaluation of performance against
the  Performance Goals to exclude any objective and measurable events
specified at the time the Performance Goals are established, including but not
limited to any of the following events that occurs during a Performance
Period: (i) asset write-downs, (ii) litigation or claim judgments or
settlements, (iii) the effect of changes in tax law, accounting principles or
other such laws or provisions affecting reported results, (iv) accruals for
reorganization and restructuring programs, (v) acceleration of amortization of
debt issuance costs, (vi) stock-based compensation charges, (vii)
purchase-accounting related charges, including amortization of intangible
purchased assets, acquired in-process research and development charges, and
similar charges associated with purchase accounting, (viii) any extraordinary
nonrecurring items as described in Accounting Principles Board Opinion No. 30,
and (ix) the related tax effects associated with each of the adjustments listed
in clauses (i) through (viii) above.

     

    2.18
“Plan”
means this Amended and Restated SunPower Corporation Annual Key Employee Bonus
Plan, as set forth in this instrument and as hereafter amended from time to
time.

     

    2.19
“Progress
Payment” means a portion of the Target Award or Actual Award for which
the Committee has determined in accordance with Section 3.6 has been earned
by the Participant as of the end of the Progress Period based on achievement of
the applicable Performance Goals and thereby may be paid to the Participant
during the Performance Period.

     

    2.20
“Progress
Period” means a period shorter than and within the Performance Period for
which a Progress Payment may be made.

     

    2.22
“Target
Award” means the target award payable under the Plan to a Participant for
the Performance Period, expressed as a percentage of his or her Base Salary or a
specific dollar amount, as determined by the Committee in accordance with
Section 3.3.

     

    2.23
“Termination
of Employment” means a cessation of the employee-employer relationship
between an Employee and the Company or an Affiliate for any reason, including,
but not by way of limitation, a termination by resignation, discharge, death,
Disability, retirement (occurring in accordance with the policies established by
the Committee (in its discretion) from time to time, or the disaffiliation of an
Affiliate, but excluding any such termination where there is a simultaneous
reemployment by the Company or an Affiliate.

     

    SECTION
3: SELECTION OF PARTICIPANTS AND DETERMINATION OF AWARDS

     

    3.1 Selection of
Participants The Committee, in its sole discretion, shall select the
Employees who shall be Participants for any Performance Period. The Committee,
in its sole discretion, also may designate as Participants one or more
individuals (by name or position) who are expected to become Employees during a
Performance Period. Participation in the Plan is in the sole discretion of the
Committee, and shall be determined on a Performance Period by Performance Period
basis. Accordingly, an Employee who is a Participant for a given Performance
Period in no way is guaranteed or assured of being selected for participation in
any subsequent Performance Period.

     

    3.2 Determination
of Performance Goals The Committee (or its designee described in Section
5.4), in its sole discretion, shall establish the Performance Goals for each
Participant for the Performance Period. Such Performance Goals shall be set
forth in writing.

     

    3.3 Determination
of Target Awards The Committee, in its sole discretion, shall establish a
Target Award for each Participant. Each Participant’s Target Award shall be
determined by the Committee in its sole discretion, and each Target Award shall
be set forth in writing.

     

    3.4 Determination
of Payout Formula or Formulae On or prior to the Determination Date, the
Committee, in its sole discretion, shall establish a Payout Formula or Formulae
for purposes of determining the Actual Award (if any) payable to each
Participant. Each Payout Formula shall (a) be in writing, (b) be based
on a comparison of actual performance to the Performance Goals, (c) provide
for the payment of a Participant’s Target Award if the Performance Goals for the


    
      
        
        

      

      
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    Performance
Period are achieved at the predetermined level, and (d) provide for the
payment of an Actual Award greater than or less than the Participant’s Target
Award, depending upon the extent to which actual performance exceeds or falls
below the Performance Goals. Notwithstanding the preceding, in no event shall a
Participant’s Actual Award for any Performance Period exceed the Maximum
Award.

     

    3.5 Date for
Determinations The Committee shall make all determinations under
Sections 3.1 through 3.4 on or before the Determination Date.

     

    3.6 Determination
of Actual Awards After the end of each Performance Period or, to the
extent Progress Payments will be made, after the end of the Progress Period, the
Committee (or its designee described in 5.4) shall certify in writing the extent
to which the Performance Goals applicable to each Participant for the
Performance Period or Progress Period, as applicable, were achieved or exceeded,
as determined by the Committee. The Actual Award for each Participant shall be
determined by applying the Payout Formula to the level of actual performance
that has been certified in writing by the Committee. Notwithstanding any
contrary provision of the Plan, the Committee, in its sole discretion, may
(a) eliminate or reduce the Actual Award payable to any Participant below
that which otherwise would be payable under the Payout Formula, and
(b) determine whether or not any Participant will receive an Actual Award
in the event the Participant incurs a Termination of Employment prior to the
date the Actual Award is to be paid pursuant Section 4.2
below.

     

    SECTION
4:  PAYMENT OF AWARDS

     

    4.1 Right to
Receive Payment Each Actual Award that may become payable under the Plan
shall be paid solely from the general assets of the Company or the Affiliate
that employs the Participant (as the case may be), as determined by the
Committee. Nothing in this Plan shall be construed to create a trust or to
establish or evidence any Participant’s claim of any right to payment of an
Actual Award other than as an unsecured general creditor with respect to any
payment to which he or she may be entitled.  A Participant must be
employed by the Company at the time of the payment to receive such payment,
unless the Participant has died or become Disabled.

     

    4.2 Timing of
Payment Subject to Section 3.6, payment of each Actual Award shall
be made as soon as administratively practicable, but in no event later than two
and one-half months after the end of the applicable Performance Period or
Progress Period.

     

    4.3 Form of
Payment Each Actual Award shall be paid in cash (or its equivalent) in a
single lump sum.

     

    4.4 Payment in
the Event of Death If a Participant dies prior to the payment of an
Actual Award (determined under Section 3.6) that was scheduled to be paid
to him or her prior to death for a prior Performance Period, the Award shall be
paid to his or her designated beneficiary or, if no beneficiary has been
designated, to his or her estate.

     

    SECTION
5:  ADMINISTRATION

     

    5.1 Committee is
the Administrator The Plan shall be administered by the Committee. The
Committee shall consist of not less than two (2) members of the Board. The
members of the Committee shall be appointed from time to time by, and serve at
the pleasure of, the Board. Each member of the Committee shall qualify as an
“outside director” under Section 162(m) of the Code. If it is later
determined that one or more members of the Committee do not so qualify, actions
taken by the Committee prior to such determination shall be valid despite such
failure to qualify. Any member of the Committee may resign at any time by notice
in writing mailed or delivered to the Secretary of the Company. As of the
Effective Date of the Plan, the Plan shall be administered by the Compensation
Committee of the Board.

     

    5.2 Committee
Authority It shall be the duty of the Committee to administer the Plan in
accordance with the Plan’s provisions. The Committee shall have all powers and
discretion necessary or appropriate to administer the Plan and to control its
operation, including, but not limited to, the power to (a) determine which
Employees shall be granted awards, (b) prescribe the terms and conditions
of awards, (c) interpret the Plan and the awards, (d) adopt such
procedures and subplans as are necessary or appropriate to permit participation
in the Plan by Employees who are foreign nationals or employed outside of the
United States, (e) adopt rules for the administration, interpretation and
application of the Plan as are consistent therewith, and (f) interpret,
amend or revoke any such rules.

     

    5.3 Decisions
Binding All determinations and decisions made by the Committee, the
Board, and any delegate of the Committee pursuant to the provisions of the Plan
shall be final, conclusive, and binding on all persons, and shall be given the
maximum deference permitted by law.

     

    5.4 Delegation
by the Committee The Committee, in its sole discretion and on such terms
and conditions as it may provide, may delegate all or part of its authority and
powers under the Plan to one or more directors and/or officers of the Company;
provided, however, that the Committee may not delegate its authority and/or
powers with respect to awards that are intended to qualify as performance-based
compensation under Section 162(m) of the Code.

    
      
        
        

      

      
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    SECTION
6: GENERAL PROVISIONS

     

    6.1 Tax
Withholding The Company or an Affiliate, as determined by the Committee,
shall withhold all applicable taxes from any Actual Award, including any
federal, state, local and other taxes.

     

    6.2 No Effect on
Employment Nothing in the Plan shall interfere with or limit in any way
the right of the Company or an Affiliate, as applicable, to terminate any
Participant’s employment or service at any time, with or without cause. For
purposes of the Plan, transfer of employment of a Participant between the
Company and any one of its Affiliates (or between Affiliates) shall not be
deemed a Termination of Employment. Employment with the Company and its
Affiliates is on an at-will basis only. The Company expressly reserves the
right, which may be exercised at any time and without regard to when during or
after a Performance Period such exercise occurs, to terminate any individual’s
employment with or without cause, and to treat him or her without regard to the
effect which such treatment might have upon him or her as a
Participant.

     

    6.3 Participation
No Employee shall have the right to be selected to receive an award under this
Plan, or, having been so selected, to be selected to receive a future
award.

     

    6.4 Indemnification
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
(a) any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
the Plan or any award, and (b) from any and all amounts paid by him or her
in settlement thereof, with the Company’s approval, or paid by him or her in
satisfaction of any judgment in any such claim, action, suit, or proceeding
against him or her, provided he or she shall give the Company an opportunity, at
its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company’s Certificate of
Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under
any power that the Company may have to indemnify them or hold them
harmless.

     

    6.5 Successors
All obligations of the Company and any Affiliate under the Plan, with respect to
awards granted hereunder, shall be binding on any successor to the Company
and/or such Affiliate, whether the existence of such successor is the result of
a direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business or assets of the Company or such
Affiliate.

     

    6.6 Beneficiary
Designations

     

    a. Designation.
Each Participant may, pursuant to such uniform and nondiscriminatory procedures
as the Committee may specify from time to time, designate one or more
Beneficiaries to receive any Actual Award payable to the Participant at the time
of his or her death. Notwithstanding any contrary provision of this
Section 6.6 shall be operative only after (and for so long as) the
Committee determines (on a uniform and nondiscriminatory basis) to permit the
designation of Beneficiaries.

     

    b. Changes.
A Participant may designate different Beneficiaries (or may revoke a prior
Beneficiary designation) at any time by delivering a new designation (or
revocation of a prior designation) in like manner. Any designation or revocation
shall be effective only if it is received by the Committee. However, when so
received, the designation or revocation shall be effective as of the date the
designation or revocation is executed (whether or not the Participant still is
living), but without prejudice to the Committee on account of any payment made
before the change is recorded. The last effective designation received by the
Committee shall supersede all prior designations.

     

    c. Failed
Designation. If the Committee does not make this Section 6.6
operative or if Participant dies without having effectively designated a
Beneficiary, the Participant’s Account shall be payable to the general
beneficiary shown on the records of the Employer. If no Beneficiary survives the
Participant, the Participant’s Account
shall be payable to his or her estate.

     

    6.7 Nontransferability
of Awards No award granted under the Plan may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will,
by the laws of descent and distribution, or to the limited extent provided in
Section 6.6. All rights with respect to an award granted to a Participant
shall be available during his or her lifetime only to the
Participant.

     

    
      6.8 Deferrals
The Committee, in its sole discretion, may permit a Participant to defer receipt
of the payment of cash that would otherwise be delivered to a Participant under
the Plan. Any such deferral elections shall be subject to such rules and
procedures as shall be determined by the Committee in its sole
discretion.

    

    
      
        
        

      

      
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    SECTION
7: AMENDMENT, TERMINATION AND DURATION

     

    7.1 Amendment,
Suspension or Termination The Board or the Committee, each in its sole
discretion, may amend or terminate the Plan, or any part thereof, at any time
and for any reason. The amendment, suspension or termination of the Plan shall
not, without the consent of the Participant, alter or impair any rights or
obligations under any Target Award theretofore granted to such Participant. No
award may be granted during any period of suspension or after termination of the
Plan.

     

    7.2 Duration of
the Plan The Plan shall commence on the date specified herein, and
subject to Section 7.1 (regarding the Board or the Committee’s right to
amend or terminate the Plan), shall remain in effect thereafter.

     

    SECTION
8: LEGAL CONSTRUCTION

     

    8.1 Gender and
Number Except where otherwise indicated by the context, any masculine
term used herein also shall include the feminine; the plural shall include the
singular and the singular shall include the plural.

     

    8.2 Severability
In the event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.

     

    8.3 Requirements
of Law The granting of awards under the Plan shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be
required.

     

    8.4 Governing
Law The Plan and all awards shall be construed in accordance with and
governed by the laws of the State of California, but without regard to its
conflict of law provisions.

     

    8.5 Captions
Captions are provided herein for convenience only, and shall not serve as a
basis for interpretation or construction of the Plan.

     

     

    
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